Altice France’s standoff with creditors is heating up.

Secured creditors advised by Gibson Dunn and Rothschild have signed a cooperation agreement with a view to binding their acts together, while a cross-holder group advised by Milbank, Houlihan Lokey and Willkie Farr has also formed.

To determine potential outcomes for creditors it's first important to understand not only where value breaks but also where it sits in the group, and owner Patrick Drahi’s levers to direct proceedings.

In this deep-dive report we explore the range of eventualities that are blown open by creditors’ diverging incentives, Drahi’s huge capacity to strip value away from the group, French law considerations and the intricacies of timings, triggers and creditor group make-ups.

We first outline asset coverage in various scenarios ranging from value breaking in the secured debt to complete coverage of the unsecured debt. We then move on to why we believe it’s difficult to achieve a consensual deal across the capital structure that gets leverage to Drahi’s target of 4x.

This leads us on to five possible alternatives scenarios:

• The potential for a deal that cuts out the unsecureds
• A deal that splinters secured creditors
• A proactive approach by unsecured creditors to do some form of transaction involving unrestricted group value (i.e. uptier, dropdown, priming, etc.)
• A deal that could see creditors collectively triumph over Drahi
• A nuclear coercive exchange potentially available to Drahi

The report concludes with a look at current pricing levels across the cap stack and what we deduce is potentially being priced into the curve.

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